Hi, I have a few questions on the 2007 September paper:
Question 8 ii (Option C)
I am struggling to agree with the examiner report for this part.
For this option, it is making the underwriting conditions more strict: to exclude pre-existing conditions (did not exclude previously)
I interpret this as the exclusion clauses will be clearly disclosed and explained at the outset.
However, the solution seemed to be implying the other way - From excluding pre-existing condition to not.
Specifically:
- Point 3 & 4 mentions the risk of claim being denied and customer being uncertain about the eligibility to claim.
Shouldn't an exclusion clause be clearly disclosed at the outset, so there is nothing to be uncertain about. And the claim shouldn't be "at risk" of being denied because it is already set out clearly at the outset it will not be covered
- Point 6 mentions attracting substandard risks to the insurer.
Shouldn't an exclusion clause deter substandard lives away instead? In the sense that, they should realise at the outset there is no chance trying to claim for pre-existing conditions. So they (shouldn't) even try their luck
- Final point is about getting an agreement with the reinsurer
Shouldn't the reinsurer be happy about this instead? Because there should be lesser claims
In essence, I think the solution for option C is implying exclusion clause being removed rather than introduced.
Did I understand the question/examiner report wrongly?
I am taking a very old past paper to practice on, as a way to root out areas of the course I didn't understand well.
I would really appreciate it if someone can explain these to me.
Thanks,
Trevor
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